Shulginov: reduction of 500,000 bpd in output of Russian oil could impact oil price in H2

MOSCOW. March 15 (Interfax) - The reduction of oil production in Russia in March by 500,000 bpd could shortly have an affect its market value in the short term, Energy Minister Nikolai Shulginov said during "government hour" at the State Duma.

"Since March, as you know, we are reducing oil production by 500,000 bpd. We believe that in H2 of the year this, among other things, may affect the market value of oil," Shulginov said.

He noted that this would reduce the discount on Russian oil grades going forward. "Today, sales are at a discount. You know that a decree has been passed where the discount is reduced, starting from April, and changes are being made in terms of accounting for the specifics of EPT and MET given the discount and excise taxes on crude. This should stabilize and reduce the threat of a sharp decline in federal budget revenues," the minister said.

As reported, Russia announced a "voluntary" oil output cut of 500,000 bpd starting in March, with the reduction only affecting oil. Russian Deputy Prime Minister Alexander Novak said that the decision was made without international consultations and will help restore market relations against the backdrop of restrictions against Russian energy commodities.